Tourneau Is Reaching Out—and Down

September 1, 1999byGlen Beres

Tourneau, one of the nation’s largest watch retailers, is about to get bigger. The New York company, which operates nine luxury stores across the country, is launching a new retail format this month. The concept, called “Watch Gear,” will concentrate on moderately priced products like Swatch, Longines, and Movado. Even though many retail jewelers carry the same brands, Tourneau doesn’t see itself as their competitor. Rather, it believes it’s simply expanding the overall market for watches.

The company expects to open at least 20 Watch Gear stores over the next 12 to 15 months. These will complement Tourneau’s existing stores, including five in New York, one of which is its huge, multilevel, 16,000-sq.-ft. flagship “Time Machine,” the world’s largest watch store. It also has stores in California, Florida, and Texas.

A: First, to grow our business, we have to expand the market, not increase our market share. Watches are relatively low on the totem pole in terms of status symbols and account for a very small slice of the U.S. luxury market. For this reason, we believe our competition is other luxury items, not watch retailers.

Second, we’re spending a healthy $20 million a year on advertising but have only nine stores. Our name recognition is strong nationally; through our “800” phone order business and direct mail, we’ve amassed a customer database from all over the country. So we feel that the Watch Gear stores will immediately be able to “piggyback” onto that ad campaign and expand our presence nationwide.

Third, in recent years, we’ve had the real estate available in existing Tourneau stores—especially the Time Machine store—to bring in more moderate Swiss brands and Japanese brands and carry more opening price points. [D’Ambrosio expects the average ticket in the Watch Gear stores to be around $350.]

We’ve done very well in this area and see great potential there. The younger crowd, in particular, is receptive to this [entry-level] category.

Q: What are the main differences between your existing Tourneau stores and the Watch Gear format?

Watch Gear stores will operate as a subsidiary with separate funding, so they won’t slow the growth plans of the traditional stores. Eventually, when it reaches critical mass, the Watch Gear division will have its own ad campaign. These stores cost between one-third and one-half less per square foot to build than our traditional units.

Q: What kind of brands will the Watch Gear stores carry?

A: We’ll carry names like Swatch, Fossil, Longines, Raymond Weil, Movado, and G-Shock. There will be some overlap with our traditional stores, but we aren’t worried about cannibalization, because the divisions will be separate and unique and target a different customer base. With the new brands we’ve brought in for Watch Gear, Tourneau as a company will now offer consumers more than 90 brands.

Q: You seem to be targeting some of the same customers as competing watch chains like Watch World and Watch Station. How will you distinguish yourself?

A: We found that consumers’ perception of prices at those competing stores stopped well before their perception of Tourneau’s prices began. This perception was much higher than reality. We saw a void for watches in the $500 to $700 range. The Watch Gear concept will fill that void. Also, our Watch Gear stores will have a unique, though consistent, design and a powerful advertising campaign behind them. Each unit will have an in-store service/repair technician, and our staff will be in uniform.

Q: What are your expansion plans for the Watch Gear division?

A: We plan to open six to eight stores this fall and 20 over the next 12 to 15 months. These will be primarily mall locations, although there will be some freestanding units. All will be in-line stores. The first openings will most likely be in the World Trade Center [New York]; the Short Hills Mall in New Jersey; the Garden State Plaza in Paramus, N.J.; the Roosevelt Field Mall in Long Island [New York]; South Coast Plaza in Costa Mesa, Calif.; and malls in Texas, Florida, Chicago, Los Angeles, and San Francisco. It will depend on who crosses the finish line first. Most of these are satellite locations of existing Tourneau stores that can pick up some of the [existing] marketing mix. We’re also looking at entering new markets like Boston, Atlanta, and some other cities.

Q: What will the Watch Gear stores look like inside?

A: They’ll have a youthful, open, modern look. They’ll offer an extensive use of glass and light. Displays will be backlit. The stores will be very accessible and interactive for consumers and promotional event-oriented. Each brand will have its own movable display with light boxes. Everything will be modular, so presentations will be easily adaptable. The stores will utilize scrim fabric and have watch gear motifs throughout. The name “Watch Gear” represents not just watches as an item of fashion “gear” but also the gear inside the watch itself. The stores were designed by a New York firm [Jerry Haines] that won a contest among 30 designs.

Q: Will the Watch Gear stores tie into the 24-page inserts Tourneau has been running in major magazines?

A: Yes. Starting last December, we asked the magazines to speak directly to the readership to get people more interested in watches. We launched inserts with Architectural Digest, Fortune, GQ, Vanity Fair, and Vogue, with brands and themes geared toward their individual readerships. These inserts were designed so they could be mailed as stand-alone pieces. We will definitely work the Watch Gear stores into the campaign.